By Lucianne Limo and Macharia Kamau

NAIROBI; KENYA: After recording a massive loss last month, Kenya Airways could be headed to worse financial status after a court ordered it to reinstate retrenched employees.

Just when the national carrier is smarting from the Sh6.6 billion half-year loss, it is now forced to recall 447 of the employees it sacked in a cost-cutting measure.

In the retrenchment plan KQ was hoping to save Sh1.2 billion annually in labour costs. The plan was informed by concerns of a growing wage bill that doubled from Sh6 billion in 2007 to Sh13.4 billion and the cuts were expected to reduce its staff cost by between 10 to 15 per cent, annually.

In September, the airline sent home about 550 employees whose roles, it said, were redundant following a staff rationalisation programme.

Unfair termination

However, a ruling by the Industrial Court yesterday said the move amounted to unfair termination of employment that may have been borne out of bad faith as opposed to the cost-cutting measures cited.

In the ruling, Justice James Rika directed the sacked employees to resume work today on grounds their contracts were unfairly terminated. The airline was also ordered to pay them their salaries for the months lost.

“The restructuring, redundancy and retrenchment process carried out by the first respondent (KQ) between August 1 and September 4, were substantively without justification and procedurally wrong, amounting to unfair termination of employment,” read the ruling in part.

“All the affected 447 unionisable employees are hereby reinstated to their roles at KQ, held as of August 30. All shall be paid their salaries and allowances from the month of September. All the employees are directed to report to work tomorrow at 8am.”

A total of 545 had been affected by the programme, 98 of them opting for voluntary retirement.

In August, KQ chief executive Titus Naikuni sent a notice to all employees informing them labour costs had become unsustainable due to increased headcount over the previous financial year as a result of significant annual salary increments.

KQ had planned to spend Sh800 million in severance pay for those affected by the retrenchment.

Arm-twisting

About 80 per cent of the affected personnel, however, declined to take up the severance package and instead decided to engage their Aviation and Allied Workers Union and sought legal redress.

According to the court ruling, those that opted for early retirement may have been arm-twisted to take the severance packages and the airline may not have been genuine in its reasons for laying off employees.

KQ has said it is viewing the ruling and its implications as the carrier’s lawyer suggested that the airline would consider appealing the decision.

The next step

“In relation to the ruling made by the Industrial Court sitting in Nairobi today (yesterday) on the issue of staff rationalisation programme, Kenya Airways wishes to confirm it has been made aware of the court’s decision. However, our lawyers are studying the ruling and its implications. We shall advice on the next steps in due course,” said Naikuni in a statement on Monday.